Sunday, October 31, 2010

Before the index fund was a gleam in Jack Bogle's eye, before the Dow hit 1000, GM's Pontiac line offered cars that looked like Chevys with extra chrome. Added horsepower became a lure. And by 1960, this Bonneville Sports Coupe boasted a wide stance (plus an awesome rear window for its time).

Fittingly, perhaps, on this Halloween the Pontiac car line ends it run and becomes a ghost.

Thursday, October 28, 2010

Whoa! The rich don't have to work; they're rich. They work to keep a business growing, or for fun, or to keep busy. Why on earth would they change their retirement plans?

They haven't. As with so many news items about the rich, this one isn't about the rich. It reports a Merrill Lynch survey of people with $250,000 or more in investable assets. A quarter-million or so is a long way from being rich enough for a relationship with Bessemer or Northern – or even with Merrill Lynch's BofA sibling, US Trust.

Those who play football, basketball or baseball for a living make such big bucks the rest of us don't feel too sorry when they lose millions to financial vultures or mere incompetents. But rich jocks need more financial smarts or more reliable guidance.

To gain attention from well-heeled men, generations of advertisers have appealed to the hunting instinct.

"Eighteen holes of golf is like sitting in a rocking chair compared with a day's hunt," proclaims this 1931 ad from The Greatest Sporting Goods Store in the World.

Gentlemen hunters may have become more cautious after the Great Depression. The protagonist in this Chase nest egg ad from October, 1960, seeks pheasant, not bear. Still, give him credit for using a muzzle loader.

Yikes! That's supposedly a "worst case scenario," and maybe as little as $6 billion more will be required. However, based upon the track record of the estimators in 2008, it seems just as likely to me that we'll burn through $500 billion before we're done.

Tuesday, October 19, 2010

Roar, lion, roar! We mentioned the tepid performance of Yale and Harvard's endowments last year, so it's only fair to salute Columbia and Princeton for doing much better.Note that Princeton's wealth is managed by Andrew Golden, a disciple of Yale's David Swensen.

The New York Times wonders why no one remembers the big Obama tax cut? You remember, the "Make Work Pay" tax cut? $400 a year for two years? Instead of sending everyone a check, as happened in the Bush administration, the withholding tables were adjusted. The theory was that this approach would cause the tax cut to be instantly spent, whereas a "big" check would be saved or used to pay down debt. Not only do people not give Obama credit for cutting their taxes, according to the Times most people think he has increased taxes!

"Anyway, this is how the credit will look to me. Sometime in about June (why June? no one has said, but most likely IRS is busy until then) my tax withholding will go down by about $13. Yay! Then next January my tax withholding will go up by about $6. That's because next year the same $400 credit will be spread over 12 months instead 7. Crap, that will still feel like a tax increase to me. I will have grown accustomed to that $13 extra. Then in 2011 my withholding will go up again by another $7 as the credit expires—another tax increase."

Although I'd like to tell the Times I told you so, it's not satisfying.

Beyond sloppy documents, the foreclosure debacle has exposed one of Wall Street's little-known practices: For more than a decade, big lenders sold millions of mortgages around the globe at lightning speed without properly transferring the physical documents that prove who legally owned the loans.

Now, some of the pension systems, hedge funds and other investors that took big losses on the loans are seeking to use this flaw to force banks to compensate them or even invalidate the mortgage trades themselves.

Their collective actions, if successful, could blow a hole through the balance sheets of big banks and raise fundamental questions about the financial system ….

Do we have a new threat to the wealth that wealth managers manage or a false alarm?

Tuesday, October 12, 2010

"Rich." "High Net Worth." We toss those terms around as if wealth were stable and easy to value. Ha! Priced Florida condos or Arizona tract houses lately?

Yet if some of yesteryear's six-figure assets are now worth little, items once purchased for a pittance may now represent real money.Paul Greenwood, who turned a hedge fund into "sort of a Ponzi scheme," spent $3 million of his loot on old teddy bears. Tomorrow Christie's auctions them off, including this distinctive Steiff harlequin bear.

Thursday, October 07, 2010

On September 14, I suggested that, to make it feel more like an actual tax cut, and not just the preservation of the status quo, Congress might let the Bush tax cuts expire and then restore them about April 15 or so.

Friday, October 01, 2010

Organizations representing a wide array of constituencies have called on Congress to ban tax patents before the end of the year, warning that a failure to do so will inhibit tax preparers from using strategies that could save their clients money.